Pier G. Monateri


ECONOMIC LOSSES IN ITALY


The standard doctrine, The status quo interest, Good name, The market : entering in and checking out, detrimental reliance.



 
 
 
 
 
 
 
 
 
 
 
 
 
 



1. Introduction : the standard doctrine


The main provision on torts in Italy is art. 2043 c.c. : a transplant of famous art. 1382 C.nap. It was translated in English1 as follows : " Any fraudulent, malicious, or negligent act that causes an unjustified injury to another obliges the person who has committed the act to pay damages".
As a matter of principle it is quite evident that no distinction is made between physical damages and pure economic losses. Both may be an unjustified injury.
The standard doctrine was that an injury is unjustified whenever there is an offence to an absolute right of the victim such as property, liberty, life or reputation. Only in such cases the tortfeaser should be bound to pay damages, otherwise the victim could not recover, except when the tort was intentional.
From a comparative perspective the standard doctrine in interpreting a transplant from French legsilation was quite similar to the provisions of the German Code (par. 823 and 826 BGB) !
In principle the recovery of pecuniary losses was not a problem, as long as they derive from an offence to an absolute right of the victim. As a matter of fact, anyway, an injury to property or to the person is quite always a phisical damage. Besides the business reputation was not protected, and so far Courts have not been addressed to solve cases on false informations. But the standard doctrine was widened during the sixties and the seventies.
The S.C. held in Meroni 2 that a creditor can recover damages for the pecuniary losses he suffered from an injury to his debtor.
It was the case of a famous soccer player killed by a car. The soccer team, Torino f.c., sued for damages alleging an economic loss3 .
The creditor had only a relative right derived from the contract with the player, and no kind of an absolute right on him against third parties, but notwithstanding the S.C. stated that in principle he could recover damages: it was clear that the old doctrine collapsed.
This Meroni doctrine is now used whenever an employee is wounded or killed in an accident. In these cases the employer, bound by Statutes to pay wages or other sums to the employee or his family, is allowed to recover damages from the tortfeasor.
It is quite evident anyway that the the injury at the origin of the economic loss of the employer is a physical damage to the employee.

2. Failla vs. Paskwer-De Chirico : the status quo interest .


An important case of pure economic losses was decided by the S.C. in Failla v. Paskwer ved. De Chirico 4.
Failla was considering to buy a picture of De Chirico. He was not at all convinced by the seller that the picture was not a copy. So he decided to approach the painter. De Chirico was quite old at the time. He recognized as his the picture and painted on it a second signature. Later it was discovered that the picture was in fact a copy. De Chirico died meanwhile and Failla sued for damages the widow Mrs. Paskwer. It was granted for sure that DeCirico didn't act intentionally, but for negligence only.
The S.C. held, in favour of Failla, that everybody has a right not to be economically worsened : a right protecting his pecuniary status quo interest.
This right was infringed by De Chirico because he negligently gave Failla false informations determining a loss in his "Patrimonio", which is the set of all assets and properties belonging to a person.
According too the S.C. everybody has a right to the "integrity of the Patrimonio", and the right of Failla was violated because we wasted money buying a copy.
The S.C. also stated that Failla had a right to freely decide to buy or not, and that the misinformations he received from De Chirico violated his right of free choice.
It is to me also clear that the S.C. approached tha case in terms of a right of the victim, and not in terms of a duty of the tortfeasor because of the old doctrine centered on the idea that an injury to be "unjustified" must be an injury to a specified right of the victim. Even if a right not to be worsened is anything but specific.
Whatever one may think about this mass of nonsenses it is crystal clear that whenever there is a damage (other than a moral damage) the "Patrimonio" suffers a loss, so the rule became that no damage can be left where it felt 5.
Anyway the Courts used this "new" doctrine in a more limited way.



3. Good name


In Limoni s.n.c. v. Guerlain S.A. e Guerlain S.p.a. 6 the S.C. faced a case in which Limoni snc was merchandising without any license products of Guerlain. The name of the licensee has been cancelled and the original tag - with a number to identify the single product - has beene removed. Guerlain alleged that his commercial practice to merchandize through authorized licensees was intended to preserve his good business name, and that the tags on products were essential to identify defects and so to protect the customers. The S.C. held that Limoni committed a tort against Guerlain and used the idea of an injury to the "Patrimonio" of Guerlain, transferring a doctrine created in the field of false informations to protect the business good name of a famous perfume-producer. Besides it was not the pecuniary status quo of Guerlain which suffered. Actually Guerlain did'nt waste money. Guerlain alleged a possible future loss of prestige on the market with a possible negative consequence to his revenues.
In Soc. Valentino Garavani c. Soc. Postalmarket ,7 Postalmarket bought many products from the authorized licensees of Valentino and merchandized them in a Mail catalogue addressed to a lower class target. Giuliani, J. held that this was a tort against the prestige and good business name of Valentino quoting Limoni v. Guerlain as a precedent but without any further reference to the pecuniary status quo interest.
So the protection of business good name became established indipendently of the Failla - De Chirico doctrine.
In Veuve Cliquot, Ponsardin, Moet et Chandon,Mumm etc. v. Zarri 8 , Zarri commercialized soaps in the shape of famous champagne bottles. The Court confirmed the rule but denied damages to the Champagne producers, because their good name and reputation was not actually offended. Selling soap is a total different business that selling wine, and besides their reputation was even strongened by the affaire.

4. The market : entering in and checking out


In Sindacato provinciale giornalai v. Tirelli e Comune di Roma 9 the syndacate of news publishers and vendors denied for 30 years to Mr. Tirelli the right to sell news.
To become a news agent a public license is required, and Tirelli got it from the Rome authorities. But besides it is patently necessary to contract with the Syndacate to receive copies of newpapers and journals to sell them to the public. Even if Tirelli had his license the Syndacate always refused to contract with him. The Court of Appeal gave judgement in favor of Tirelli 10.
According to the Court the practice of the Syndacate was an offence to economic freedom arguing that art. 41 of Italian Constitution11 grants to everybody a right to access on the market. The S.C. in a precedent12 invoked by the Court of Appeal stated in a similar case that to boycott the access on the market could be an unfair commercial practice (Concourrence déloyale). But the action now was brought in tort, and the S.C. in this case reversed the decision of the Court of Appeal and gave judgement for the Syndacate.
The S.C. held that Tirelli had no absolute right to enter the market of news selling, so he was not allowed to recover damages for the loss of a business opportunity he had not the absolute right to start.
The Court held that in the case the agreement among producers and vendors was not arbitrary: they didn't exclude Tirelli without reason. They just fixed general standards and Tirelli did not comply with them. Besides no Statute was imposing on the Syndacate a duty to contract with everybody.
The Court referred to Meroni and De Chirico as "exceptions" to the principle of the necessity of an offence to an abolute right of the victim. Exceptions which must not be widened without purpose.
In other financial cases the Courts refused to enlarge the domain of liability for economic losses.
In Curti c. Ciampi 13(the former President of Bank of Italy and former prime minister) Curti was a deluded shareholder of Calvi's Banco Ambrosiano spa (BASPA). When Calvi was found hung in London evidence revealed that BASPA bankruptcy was due to many crossboard operations which at the time had to be patrolled by the Bank of Italy. Since no information at all was given to customers about these risky and eventually illegal operations, and since the
Bank had a statutory duty to exercise control, Curti having lost his investment in BASPA sued for damages Mr. Ciampi on behalf of the Bank of Italy. The Court refused to assess damages because in the case Curti had not a "right", but just a legitimate interest in a proper administrative control 14.
According to italian version of Balance of Power a civil judge has no power to order to do something to other branches of government. So he has also no power to check the diligence of PA in exercising a power of control. The civil judge can just assess damages when PA commits a "clear" tort against a private citizen, such as an offence to an absolute right as property, health, reputation etc. The case was indeed a case of false informations on the market due to negligence (if not worse) of the central Bank provoking a mass loss to many customers nobody paid for, but the courts refused to refresh the old doctrine widening liability.
The same principle, grounded upon the distinction between "rights" and "legitimate interests" was applied in Cassa Conti e sovvenzioni v. Min. Tesoro e Banca d' Italia 15 . The plaintiff was put out of business because of an illegitimate refusal by the Bank of Italy and the Treasury Dep. to release him the required public license for banking. The refusal was declared illegal by an Administrative Court but the civil law judge refused to assess damages because the Cassa had no absolute right to enter the market of banking.



5. Concluding remarks: detrimental reliance.


In Faillla - De Chrico the S.C. created an unlimited possibility to sue for economic losses. This new doctrine is fully applied in cases of detrimental reliance.
E.g. whenever someone makes without negligence reliance to the statement of another he can recover damages if the statement is negligently false, so an action in tort can be brought even if someone signed a contract because of the false informations he received while bargaining16.
Detrimental reliance is indeed at the root of the Ratio decidendi of Failla-De Chirico when the customer bought the copy picture, worsening his position, because of the negligent false informations he received without any fault on his side. A typical case in which a wide protection of the status quo interest is fully justified17.
Italian Courts used in a rather funny way this doctrine to assess protection to Business Reputation. Now if you suffer economic losses because of an offence to your good business name you can recover damages.
But notwithstanding the large propositions used in Failla-De Chirico courts have not been too willing to widen the scope of liability, and in particular tort has not been used to assess protection to new-comers on the market, and to give relief to customers against public authorities.



 
 
 
 
 
 
 
 


1 THE ITALIAN CIVIL CODE AND COMPLEMENTARY LEGISLATION, transl. by M.Beltramo, G.E.Longo, J.H.Merryman, Oceana Pub. Co., Release 93-1, July 1993.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2 Torino calcio spa v. Romero, Cass. civ. , S.U., 26, 1, 1971, n. 174, GI 71, I, 1, 681 nota VISINTINI; FI 71, I, 342 nota BUSNELLI. The case is universally known in Italy not by the name of the parties, but of the soccer player who died in the accident.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3The Court held the principle stated above, but the Team did not succed in recover damages because the evidence of an actual damage was not deemed satisfactory.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

4 Cass. civ., 24 maggio 1982, n. 2765, per Sgroi J, in Foro it., 1982, I, c 2864.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

5 As in the original literal meaning of art. 1382 C.nap.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

6Cass. civ., 25 luglio 1986, n.4755 per Maltese J, in Resp. civ. prev., 1987, p. 833 nota P. Balzarini; cfr. M. Libertini in Nuova giur. civ. comm., 1987, I, p. 392; E. De Francisco, Il c.d diritto soggettivo all'integrità patrimoniale tra illecito aquiliano e illecito concorrenziale, Rivista Dir.civ. 1988, II, p. 683; A. Di Majo, Ilproblema del danno al patrimonio, in Riv. crit. dir. priv. 1984, p. 298.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

7Pret. Roma, 7 aprile 1987 (ord.), in Resp. civ. prev 1988, p. 114.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

8 Cass. civ 21, 10, 1988, 5716, FI 89, I, 764.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

9Cass. civ., 15 marzo 1985, n. 2018, per Sgroi, J, in Foro it., 1985, I, c. 1663, nota PARDOLESI.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

10App. Roma, 21 aprile 1980, in Giust. civ., 1981, I, p. 382
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

11The Cort followed the opinion of a learned scholarP.G. MARCHETTI, Boicottaggio e rifiuto di contrarre, Padova, 1969. As a matter of fact art. 41 states that private economic intiative is free !
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

12Cass. civ. n. 2634 , 1983.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

13Trib. Milano, 6 aprile 1982, D.Fall.,1986, II, 619
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

14I have not the time to develop here this distinction, which is essential in Italy to determine Civil and Administrative Jurisdiction. Anyway legimate interests are "private interests of a status less than legal rights which may have procedural protections against administrative abuse or unfairness" cfr. R.E.RIGGS, Legitimate expectation and Procedural Fairness in English Law, 36 AJCL, 395 (1988) with ref. to Ridge v. Baldwin [1964] AC 40 (1963); CERTOMA, The Italian legal System, London, 1985, 20-24; G. SAMUEL, Le "Droit subjectif" and English Law, 46 CLJ 264 (1987).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

15Cass. civ., Sez un, 25 marzo 1988, n. 2579, in Foro it., 1988, I, c. 8328.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

16Cassazione civile sez. I, 17 aprile 1993, n. 4545 Giust. civ. Mass. 1993, 688.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

17 Cfr. (of course) Fuller and Perdue, The Reliance Interest in Contract Damages, I, 46 Yale LJ 52 (1936), II, 46 Yale LJ 373 (1937).